CAV JUDGMENT

(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)

1. The appellants have filed the present appeal impugning an order dated 16.06.2023 [impugned order] passed by the learned Single Judge of this Court in W.P.No.105971/2022 (Excise), whereby the said petition was allowed.

2. The said writ petition was filed by the respondents [the petitioner firm], which is a registered partnership firm, impugning an order dated 13.09.2022 passed by appellant No.1 and an order dated 19.09.2022 passed by appellant No.2, whereby the petitioner firm was called upon to deposit an amount of Rs.18,40,000/- for the purpose of renewal of CL-7 Licence granted to it under Rule 17B of the Karnataka Excise (General Conditions of Licences) Rules, 1967 [hereafter ‘the Rules’].

3. The learned Single Judge has set aside the orders impugned in the writ petition and has directed the appellants to refund the amount to Rs.18,40,000/- as transfer fee collected from the legal heir of the deceased partner of the petitioner firm.

Prefatory facts

4. The petitioner firm is engaged in carrying on business under the name and style of M/s. Taniska Lodging and Boarding located at Survey No.112/2H, VPC No.1288 of Halyala Grama, Athani Taluk, Belagavi District. The petitioner firm was constituted by two partners named, Smt. Sreemantevva W/o. Laxman Suryavanshi and her grandson Sagar S/o. Kalamesh Kamble, with their respective shares being 75% and 25%. The petitioner firm had obtained a CL-7 licence under Rule 3(7) of the Karnataka Excise (Sale of Indian Made and Foreign Liquors) Rules, 1968 [IMFL Rules] in Form CL-7. The said licence was also renewed for the year 2021-2022.

5. Smt. Sreemantevva Laxman Suryavanshi one of the partners of the petitioner firm, expired on 09.10.2021. However, the business of the petitioner firm was continued uninterruptedly by the surviving partner. The surviving partner applied for renewal of licence under Rule 5A of the IMFL Rules. During the course of the scrutiny of the said application, the officials of Excise Department became aware that one of the partners of the petitioner firm had expired. Mr. Kalamesh Kamble the surviving constituent partner of the petitioner firm made a representation to appellant No.2 requesting that the licence be granted only in his name.

6. In response to the said request, appellant No.2 informed Mr.Kalamesh Kamble that under Rule 17A of the Rules, the transferee must include the name of the legal heirs of the deceased partner(s) failing which he would have to pay the transfer fee under Rule 17B of the Rules.

7. Smt. Sreemantevva Laxman Suryavanshi [the deceased partner] of the petitioner firm was survived by four daughters. Mr. Sagar Kalamesh Kamble is the eldest son of Smt. Mahadev Laxman Suryavamshi, who is one of the daughters of the deceased partner. Ms. Namratha Sukumar is the daughter of the third daughter of deceased partner.

8. On 14.07.2022, the petitioner firm was reconstituted by inducting Ms. Namratha Sukumar, the daughter of the third daughter of the deceased partner as a partner. Thereafter, the petitioner firm filed an application along with relevant documents under Rule 17A of the Rules along with no objection of the other legal heirs of the deceased partner.

9. The application of the petitioner firm, as reconstituted for transfer of the licence, was not considered as covered under Rule17A of the Rules.

Reasons and Conclusion

10. It is the petitioner firm’s case that the firm had not dissolved on the death of the deceased partner but, had continued after inducting her legal heir as a partner in her place. Hence, the CL-7 licence was liable to be transferred under Rule 17A and not under Rule 17B of the Rules.

11. The controversy essentially is confined to the question whether the petitioner firm’s request for transfer of licence falls under the scope of Rule 17A of the Rules as claimed by the petitioner firm or under Rule 17B of the Rules as contended by the appellants.

12. Rule 17A and 17B of the Rules, a